FATF Status

India is not currently on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The latest Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in India was undertaken in 2024. According to the follow-up Evaluation, India was deemed Compliant for 11 and Largely Compliant for 26 of the FATF 40 Recommendations. It was assessed Highly effective for 0 and Substantially Effective 6 of the Effectiveness ratings.

India's G20 Anti-Corruption Ministerial Meeting in August 2023 highlighted ongoing corruption issues that hinder foreign direct investment (FDI), with American businesses citing both actual and potential corruption, particularly in regulatory systems. The country scored 39 on Transparency International’s Corruption Perception Index, ranking 93 out of 180 countries, and despite various laws aimed at combating corruption, such as the Prevention of Corruption Act, enforcement remains weak, allowing bribery and red tape to persist across sectors like judiciary and public services.

India is the fastest growing large economy globally, with a GDP of $3.4 trillion, making it the fifth largest economy and projected to surpass Japan and Germany by the early 2030s. The economy grew nearly seven percent in 2023, supported by effective inflation management and structural reforms aimed at improving the business environment, despite facing challenges from protectionist measures and reliance on coal for energy.

India's investment climate has improved due to recent structural economic reforms aimed at enhancing the business environment, such as liberalizing foreign investment restrictions and modernizing bankruptcy laws. However, protectionist measures, including high tariffs and localization requirements, pose challenges for foreign investors. The government has established agencies like the Department for Promotion of Industry and Internal Trade (DPIIT) to facilitate foreign direct investment and resolve implementation issues, while also maintaining a framework that includes both automatic and government routes for FDI approval.